Published in Mint on 12th November 2017. Written by Abhishek Bondia
My son is 34 and an army veteran. He is a double amputee. His right arm is also paralyzed below the elbow. He got married a few years ago and has a child now. He wishes to buy life insurance for his family. He now runs a small shop that I used to manage. The shop has been transferred in his name. What kind of plans is available for him? Will the premiums be expensive? Kindly suggest a suitable plan.
—Brikesh Vaidya
There are no restrictions in the product to issue a policy to an amputee or paralyzed person. However, while underwriting term life insurance products, insurers are hesitant to issue coverage to people with prior critical illnesses. It is likely that, because of the paralysis, the premiums may be increased if the insurance is issued. You should consider buying personal accident insurance. These have simpler underwriting requirements and are relatively economical. However, the sum assured will be paid only if your son dies due to an accident.
I work for an MNC in Mumbai and my company offers me life insurance of Rs50 lakh as an employee benefit. However, I’ll be leaving the company in 2 months. Can I migrate this policy from group insurance to an individual life insurance cover? Also, do all companies allow this migration or do only specific policies from specific insurers offer this facility? How are premiums for such covers calculated? Is it better to buy a term life cover or opt for such migrations? I will be on a sabbatical for 2 years and hence don’t have any other life cover yet.
—Karun Dev
Portability from a group plan to an individual plan is not available for life insurance products. So, you cannot migrate your plan from group to individual. In fact, there are limited benefits of such portability in life insurance. The main advantage of portability is to carry forward waiting periods from the previous policy. Life insurance products do not have any waiting period for pre-existing ailments. The only waiting period is for suicide, which is applicable for the first policy year.
The premium for individual life insurance products is based on the age of the individual, prevailing health conditions, and duration of the policy term. You should look at buying a term cover until the age of 65. Consider a sum assured of at least 10 times your current annual income. Insurers give substantial weightage to recent income. If you are planning to go on a sabbatical soon, you should consider buying life insurance before leaving employment.
Are there any term life insurance covers that also cover temporary disability? I have a term plan of Rs1 crore and my agent is pestering me to buy an add-on cover. How useful are these covers and should I go for them?
—Arvind Sharma
Life insurance plans typically offer permanent disability as an add-on. In case the insured loses either limbs or eyes, it is classified as a permanent total disability. In case any other body part gets permanently damaged, for instance, the loss of a finger, it is classified as a permanent partial disability. Life insurance products generally do not offer temporary disability cover. Under a temporary disability cover, the insured is paid a weekly allowance if the person is totally disabled temporarily.
If you are looking for disability coverage, it is better to consider a general insurance plan. A personal accident plan would cover both accidental death and disability. Such plans generally cover all kinds of disabilities discussed here and are more cost-effective.
I am a single woman with no stable income at present. I am primarily supported by my father, who is 56 years old. As he is a lawyer, his working age will extend into the 70s. Can I buy a term life insurance for my father from my income? Or is it the case that only the insured person can buy a policy on his/her life?
—Sharul Sinha
Term insurance needs to be bought for an earning individual. So, your father is eligible to buy term insurance. Since you are a dependent and nominee the insurer is unlikely to accept your paying the insurance premium. It is best if your father pays for this himself. He will need to be actively involved in the purchase because a medical test is mandatory for him.
I am 75 years old. My wish is that my last rites be done in my ancestral village. In the West, elderly citizens can buy insurance policies to finance their funeral expenses. Can I also buy such a policy in India to fulfill my wish?
—Jaganand Rathi
Funeral insurance is a standard insurance policy available in overseas markets. The objective of a funeral policy is to pay a lump sum immediately to finance funeral-related expenses. However, such coverage is not available as a stand-alone product yet in India. However, you could just set aside the money for your funeral without purchasing insurance for that.